SET Announcements

came from decreasing in inventories of Baht 521 million and drop in other assets of Baht 250 million.Cash received from operating liabilities of Baht 1,322 million, combining with Baht 1,460 million from increasing in trade accounts payable and Baht 138 million from decreasing in other operating liabilities.Interest and corporate income tax the Company paid by cash amounting to Baht 207 million. 2) Net cash used for investing activities was Baht 137 million; Baht 146 million of cash payment for investment in fixed asset-equipment.Cash increased from the sale of fixed assets-equipment of Baht 9 million. 3) Net cash used in financing activities was Baht 800 million to repay short-term loan.At the end of the first quarter of 2010 cash and cash equivalents outstanding was Baht 4,111 million which consisted of Baht 217 million appropriated for PQI project and Baht 3,894 million for normal operation usage. 4. Factors and major influences that may affect the Company's performance or financial status in the future 4.1 Gross Refining Margin Hedging (GRM Hedging) The situation of oil price likely to continually fluctuate according to fundamental factors both demand side and supply side as well as speculating of which directly affects gross refining margin. Being realized such risk, the Price Risk Management Committee (PRMC) consisted of high-level executives and related divisions, was set up in 2006. PRMC is responsible in officiate prescribed hedging policy and objective as well as closely monitor the oil price market situation by utilizing some hedging instruments available in the market properly, such as buying derivatives to determine the appropriate and level satisfied margin between product and crude in advance and/or inventory price management, etc. The company will continue to pursue hedging policy for risk management to minimize impact on business operations. 4.2 Foreign Exchange Another factor which may have impact on the Company's performance is the foreign exchange volatility (mostly Baht/USD). The Company pays for the feedstock in US dollar term and sells its product on US dollar-linked basis, and subsequently records transactions as trade payable and trade receivable respectively. Since the Company's assets are greater than liabilities', the appreciation of Thai Baht will cause the shrink in net assets value, Baht margin value, and vise versa. However, being aware of that risk, the Company has been managing to mitigate the risk by utilizing some market financial instrument. In addition, the Company has performed Cross Currency Swap (CCS) from Thai baht loan to Dollar link amounted USD 200 million following the policy to leverage the differences of US dollar liabilities balancing with revenue (natural Hedge) to protect the business from impact of the exchange rate fluctuations. Therefore, when the Baht depreciates, the Company will record loss from exchange rate and realize the increase revenue in the term of baht. But in the other hand, when the Baht appreciates, the revenue in the term of baht will be reduced however the Company will realize gain from the exchange rate. The referred CCS contracts affected from January 5, 2010 to June 30, 2013. 4.3 Investment in new business With the vision of the Company to create energy business on good governance principles with keen concerns to social and environmental aspects for sustainable development, therefore feasibility studies of investment in new business of every project will provide risk analysis of the impact toward the strategic objective achievement of the project, extreme level assessment of each risk factor, risk management planning to eliminate or minimize the impact from such risk factor, including progress follow-up of risk management plan compliance through the consideration of the Enterprise Risk Management Committee to ensure the operation and achievement of the investment in any new business. The Company has determined business expansion direction toward alternative energy which is not only the business to help lessen the present global warming situation and the source of clean energy to replace fossil energy (oil and coal), it is the business of high growth potential, or it can even expand to the natural resource development business with clean environmental friendly technology, and other new business relating or non-relating current business of the Company. This can be a value added business for the Company or revenue diversification for the Company in the future. With its determination to develop business with environmental friendly and social responsibility for sustainable development, the Company aims to develop its business to be the Zero Global Warming Impact Company 5. Environmental Cost Accounting Having the environmental concerns and social responsibilities, since 2005, the Company has prepared the environmental management accounting report (production line) and also published in the Sustainability Report. The environmental cost accounting helps the Company to keep track the related information, which is useful for enhancing the environmental management effectiveness, and resource utilization. The report for the first quarter of 2010 compared to the same period of last year is summarized here under; (Unit : Million Baht) 1Q2010 1Q2009 Change +/- Material Costs of Product Outputs 20,957 13,301 +7,656 : Consist of crude oil, ethanol, bio-diesel, chemical, energy and utilities in production Material Costs of Non-Product Outputs 42 25 +17 : Consist of slop and sludge oil, waste water, chemical surplus Waste and Emission Control Costs 22 18 +4 : Consist of maintenance cost of environmental control equipments and depreciation and other fees Prevention and Other Environmental 2 05 +1.5 Management Costs : Consist of monitoring and measurement cost, environmental management system expenses Benefit from by-product and waste recycling -0.5 -1 -0.5 : The revenue realization from liquid sulfur, glycerin, waste paper From the above table, the increase of Material Cost of Product Outputs mainly came from the high oil prices and production run, including an increase of chemical, water, and energy expenses which were used for the operation of the PQI units, as well as, the increase of demineralized water production to produce steam for the Co-generation power plant's pipe cleaning during the test run. The material costs of non-product outputs increased from last year by Baht 17 million, mainly came from the cost of oil storage tank maintenance. Waste and emission control costs increased from the wastewater treatment cost which was in accordance with the high water utilization and wastewater. For the prevention and other environmental management costs were 4 times higher than that of the first quarter of last year due to the Company's emphasis on the environment quality control and more operations on the management system.